Baillie Gifford Managed Fund - added to Wealth 150
Richard Troue | Mon 19 January 2015
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The Baillie Gifford Managed Fund has been added to the Wealth 150 list of our favourite funds across the major sectors.
The fund is managed using a team-based approach and invests globally in shares, bonds and cash, with a different manager responsible for selecting stocks in each region. Steven Hay and Iain McCombie then have responsibility for deciding the overall asset allocation of the portfolio, taking into consideration their view of the wider economic environment. The current fund manager line-up is as follows:
| Manager name | Region |
| Iain McCombie | UK equities |
| Tom Coutts | European equities |
| Helen Xiong | US equities |
| Iain Campbell | Developed Asian equities |
| Andrew Stobart | Emerging markets |
| Steven Hay | Fixed income |
Each manager has the support of a larger team and they use a collaborative approach to identify companies they believe enjoy a sustainable competitive advantage in their industries; and which are capable of growing earnings and cash flows strongly. The fund invests predominantly in individual shares and uses some Baillie Gifford managed funds for fixed-interest and emerging market exposure.
One example of a stock recently added to the portfolio is Oracle, a leading supplier of database software. The team cites a significantly improved product offering and a stable revenue stream as key reasons for being positive. They have also added to their investment in Burberry, the high-end clothing brand, believing it could capitalise on opportunities in faster-growing Asian and emerging markets.
The fund tends to have a bias towards shares (the sector rules stipulate the fund must hold 40% to 85% in shares), though exposure will vary depending on the team's outlook. For example, during the tough stock market environment of 2008 exposure to equities was reduced to around 70%, while exposure to cash and bonds was increased. The portfolio's historic asset allocation is shown below:
Source: Baillie Gifford as at 30/06/2014
Strong performance has been generated by a combination of stock selection and the fund managers' allocation to global stock markets, according to our analysis, although there are no guarantees this will continue. A higher allocation to shares than the average fund in the sector and a bias towards growth-focused companies increases volatility and means performance tends to be stronger than average when markets are rising, but weaker during tougher times. Over the past 10 years the fund has outperformed the IMA Mixed Investment 40%-85% Shares Sector by over 28%*:
Percentage growth of the Baillie Gifford Managed Fund over 10 years
Past performance is not a guide to the future. Source: Lipper IM *to 02/01/2015
| Annual percentage growth | |||||
|---|---|---|---|---|---|
| Jan 10 -
Jan 11 |
Jan 11 -
Jan 12 |
Jan 12 -
Jan 13 |
Jan 13 -
Jan 14 |
Jan 14 -
Jan 15 | |
| Baillie Gifford Managed Fund | 19.01% | -3.64% | 11.88% | 14.17% | 3.48% |
| IMA Mixed Investment 40-85% Shares | 12.71% | -5.46% | 9.81% | 13.86% | 4.79% |
Our view on this fund
Overall, long-term performance has been good and we believe the strength and depth of the team will serve investors well. We like their patient approach and willingness to back companies through thick and thin. The team can invest in emerging markets and derivatives which can increase risk. They also have an emphasis on keeping costs low and the fund's ongoing charge for HL clients is just 0.46% a year, while the charge for holding funds on Vantage is competitive at 0.45% a year.
Find out more about this fund including how to invest
Please read the key features/key investor information document in addition to the information above.